Do you know the difference between a buyer’s market and a seller’s market? A buyer’s market means there are more homes available than there are buyers shopping for them.
A seller’s market is the reverse situation. A seller’s market occurs when there are more buyers on the market than homes available. It also means that as a buyer, you don’t have the upper-hand. Right now, we are in the midst of a hot seller’s market.
In this situation, sellers might receive several offers on their home at once. With the choice of competitive offers in front of them, they can increase the price of the home and flat-out deny negotiations. And if you’re a first-time home buyer, a seller’s market can add even more stress to a process that’s already intimidating.
But a seller’s market doesn’t mean there’s no hope for you. You don’t have to rely on pure luck to get the home of your dreams (at least, within your first-time buyer’s budget).
To help you prepare, the credit experts at Loqbox – a free tool that helps you build credit history and boost your savings – want to share 7 tips to negotiate in a seller’s market and make yourself a more attractive buyer.
1. Offer at asking price, or above if you can
You may have heard well-meaning advice from people who bought their homes in less aggressive markets to start with an offer that’s lower than the asking price. But in a seller’s market, taking the opposite approach could give you an edge above other buyers.
Your realtor can usually find out from the listing agent if the home has other offers on it. If it does, your offer should be at least the amount of the asking price. To make it even more likely that your offer is the one that gets accepted, you can offer above the asking price.
With that being said, remember to stay within your budget. Identify the maximum amount you’re comfortable offering well before you start looking at homes. It’s easy to get caught up in the moment and the temptation to outbid other eager buyers.
2. Schedule a viewing sooner rather than later
One of the most frustrating things to happen is to have your scheduled viewing canceled because the seller has already accepted another offer. With homes going so quickly, it’s a useful strategy to schedule a viewing as close to the time you’ve found the home as possible.
Many buyers wait until the weekend to schedule a viewing, but this luxury may no longer be a smart choice. If you’re able, schedule a viewing on a weekday before other prospective buyers have time to get in and make an offer. If your partner can’t get off work, ask if you can video record the home as you tour it so your partner can see as well, rather than waiting a few more days.
3. Make it personal
Another popular strategy prospective buyers are using to make themselves more attractive is to write a personalized letter to the seller and include the letter with the offer. The personal letter may include brief details about yourself and how you hope to enjoy the home. If you do include a letter, keep it short and sweet and use a positive tone to build a connection with the seller.
You can also personalize the offer by making sure your realtor writes the offer to the listing agent’s specifications. Ask your realtor to contact the listing agent before submitting your offer and gather tips for exactly what they’re looking for. If your offer is clear and concise, the listing agent might present it more positively to the seller.
4. Compliment the home
Home sales are emotional. The seller is probably selling a home that’s full of good memories. Perhaps they’ve raised a family in this home or spent decades making it their own personal space. They may have invested time and money into remodeling the home and making it exactly the way they like it.
Not only is it polite, but your admiration of the home can indicate to a seller that you share their appreciation for the home’s unique characteristics. Praising personal touches or upgrades can subtly communicate that you will take good care of the place they’ve called home for so long.
5. Be prepared and flexible when possible
Additionally, a listing agent with multiple offers to present to their client will want to know how serious of a buyer you are. Make sure your earnest money is easily available for you to put down quickly. You should also have your pre-approval letter ready to show that a lender has already backed your eligibility as a borrower.
The listing agent might also ask about your current housing situation. You should be prepared to answer questions such as:
- Are you currently a renter that will need to move in by a certain date?
- If you’re a homeowner, is your offer contingent on the sale of your current home?
- Do you live with parents or roommates who don’t need you out by a certain date?
A flexible move-in date is a good negotiating factor. The seller may be stressed about moving into their next home, so if you can offer them flexibility, they may be more likely to accept your offer.
6. Don’t ask for favors
In a buyer’s market, the buyer has more negotiating power to ask the seller to make repairs or include appliances in the sale. These requests are especially common after the inspection, where the inspection report could reveal minor faults in the home such as leaky faucets or older appliances like water heaters.
In a seller’s market, you can become a more attractive buyer if you don’t insist on these repairs or appliances for the sale to go through. If you’re able to make repairs yourself after closing, do so. And if the seller is against leaving their laundry machines behind, compromise on that if you can.
Of course, if the repairs are so major that you would otherwise back out of the sale, it’s worth asking the seller to make the repairs. Be flexible only when you’re truly comfortable doing so.
7. Keep emotions in check
Ultimately, negotiations can be a powerful way to test your commitment to the home and affordability of it as a whole. It’s easy to get excited, especially if you’ve already started to imagine yourself in the new home.
But remember that you can walk away from a non-negotiable deal if necessary. Other homes will come up for sale. Your perfect property is out there – you just have to be ready for it.
Our hope for you is that you find the home of your dreams, even in a tough seller’s market. And if you want more great tips on the home buying process – especially if you’re a first-time buyer – check out our blog.
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